Information Technology's Impact on International Trade & Rep Attributes
By Jeff Henderson
In 1998 the United States exported $105 billion less in goods and services than our international trading partners were selling to us. With the latest summarized trade data in for 1999, those numbers will most likely crest the deficit past the $200 billion mark. Since the total United States economy is closing in on $8 trillion annually, there are some economists who contend that we can easily absorb these unending mega-outflows of U.S. dollars without any adverse impact on our nation as a whole.
Whether or not this view is really credible is too complex a subject to address here. Instead, let us look at the bountiful foreign trade opportunities available to United States manufacturers who stay awake to the potential of Information Technology (IT) and the manufacturers' representatives who use IT to find and sell to international customers. In order to do this, we have to start with the very perception that manufacturers have regarding manufacturers' representative attributes.
A recent survey of United States manufacturers asked what they thought were the most important attributes an agent must possess to succeed. "Technical product knowledge" was most valuable while "Internet marketing capabilities," even in mid-1999, came in with only 1 percent of the vote. With the advantages of IT for the manufacturer, the agent and the foreign buyer, advocacy and praise of comprehensive technical product knowledge is misplaced and takes us in the wrong direction. Surveys, such as the one cited here, not only reflect the current sentiments of the people, but also perpetuate similarities and traits that make it easier for us to identify those people and companies that we want to be commercially associated with.
It is no wonder that most manufacturers are unaware of this fact-what little literature there is on the subject is not readily available. Thus, with a principal's preconceptions fixed in a pre-IT world, they do not grasp the convergence of IT with rep agencies that combine this technology and international experience. As a result, they will have a difficult time working from the same set of assumptions about how to conduct business internationally. IT is a miraculous tool. As Copernicus, the 16th century astronomer, posthumously demonstrated, evolving knowledge inevitably trumps conventional thought. And keep in mind that this is the same type of conventional thinking that is producing our gargantuan trade deficits. The current conceit might be that the world economy will always revolve around the United States and we can remain satiated indefinitely with just our home market place. Knowing that this thinking is not sustainable should help in forcing us to reappraise those things that can facilitate more exports of domestic products to our international partners.
In the continental United States, the logistics of a manufacturers' representative calling on customers to explain their line(s) of products in their limited geographic area mostly precludes the need for Internet marketing. But internationally, when one factors in eight to 16 time zone differences on multiple continents, IT inverts the above scoring of attributes. With the obvious impracticality of traveling in person to see multiple customers in far-flung locales, I have formed some guidelines concerning what lines to take on and how to interact with manufacturers:
- Category Creators--Take on lines from companies that are making mind-bending products. These lines, if they are highly differentiated and easy to understand through your client's Website, give your foreign customer an immediate marketing advantage in his country and make unnecessary the need for a high degree of technical product knowledge.
- Joint Selling--If you must take on a unique but highly technical product, make sure you work out an ongoing technical assistance arrangement with your manufacturer.
- Gradualism: Domesticating the Process of International Trade--For those principals that are still uncomfortable working with overseas customers, start by selling to the United States buying offices of your foreign buyers. It is always interesting how many client manufacturers are surprised that many international buyers are located in North America.
- Wave the Flag--Make sure your contract with manufacturers spells out that you do not want information relating to detailed product cost, production process methods or confidential business strategies. With the end of the Cold War, there has been a shift from the threat of ICBMs to economic warfare. Given the reality of industrial espionage, even amongst our own allies, by purposely demarcating your company from the highly sensitive information of your principal, one demonstrates foresight that you have your client's best interests in mind.
- Wave Them In--The "them" is the FBI and the National Counter Intelligence Center (NACIC). The FBI can consult with your clients about protection of sensitive data, and the NACIC posts advisories that can heighten their overall awareness of possible barriers. Combined, this step and the previous one will help them feel more confident that they can proceed in the export process.
- Wave Goodbye--If it becomes obvious during your meeting(s) with the manufacturers that they do not have the drive or the intent to create the infrastructure necessary for export, then opt out. You will be doing everyone a favor, especially your valued overseas buyers who have surmised that part of the agent's job is the vetting of unreliable suppliers.
Now that the attributes and traits of international manufacturers' representatives, vis-a-vis domestic representatives, have been somewhat scrambled, I want to point out how international agencies might fall under a new classification. If under the current taxonomy, domestic manufacturers' representatives are a "species" (no pun intended), then international manufacturers' representative agencies, as a "subspecies," might best be named "International Information Brokers" (IIB). Besides selling the manufacturer's products or services to foreign buyers, what greatly distinguishes the IIB is: They have developed the skills for the remote retrieval of information and the organization of that information for manufacturers that desire to sell internationally. Though hazy and vague to those not familiar with the process, in the hands of an IIB, resources are accessible from an ever-widening variety of sources.
Although in the dynamic of the Internet there is great flux, currently there are about 12,500 data bases (most of them "user-unfriendly") and close to 2,400 online systems that can be plowed through. And that is only a part of what the IIB might have to traverse. When one factors in the consulates, trade associations, chambers of commerce, government officials, college professors, writers, international trade lawyers, statistics, lists, reports, CD-ROMs, press releases, trade journals, specialty magazines, Encyclopedias of Associations, USA government publications on trade, United Nations agreements, Trade Block agreements, a smattering of non-governmental organizations and the polymorphous convergence of worldwide media that can be researched or accessed, it becomes clear how an IIB can - as an outsourced specialist - add value to the whole process of international sales. With intimate access to this type of information, here are the attributes that an IIB can offer manufacturers who want to sell into foreign markets:
- Internet marketing capabilities
- Consultative international selling capabilities
- Niche market specialization in overseas markets
- Intelligence gathering
- Helping manufacturers clearly define exporting goals
- Training of manufacturer's international department
- Setting up industry specific e-mail and fax subscriptions
- Selling to foreign governments
- Working in conjunction with the United States government
- Straight, fee-based international marketing research
While international trade rules have been greatly liberalized in the last 14 years, this great transfer of wealth to other countries is only in small measure making its way back to the United States in exchange for our exports. It is an embarrassing cultural irony that the United States, the land of immigrants, is being labeled by some of our foreign competitors as not having any great enthusiasm to go after and interact with foreign customers. (We can go to the moon, but start talking Istanbul and we cannot seem to find the budget). As cyclical booms flatten out and growth slows, domestic sales in and of themselves fail to be the plasma that circulates to all parts of our economic system. The United States government knows this and that is why they spend so much time getting the word out to manufacturers about not only the potential benefits for their own company's bottom line, but the very real overall economic benefits for our country as a whole.
The Internet, an American invention, formerly the province of only academia and industry, now becoming mainstream, gives both manufacturers and manufacturers' representatives, through IT, an incredible tool to extend ourselves into the worldwide marketplace. In the hands of specialized agents, working with forward thinking manufacturers, exporting, if not necessarily an act of citizenship, is a means of sustaining the viability of our nation as a whole.
The primacy of all customers, regardless of location, can become actual with information technology. And it is none too soon. There is no denying the long-term impact on our country because of our collective squandering of trade opportunities. The terrain must be decoded - just as our foreign partners are assiduously decoding the United States marketplace.
Because of the enormous trade surplus that the Japanese economy was building up with its worldwide trading partners up into the mid-1980's, and to better reflect the overall strength of the Japanese economy, the 5 leading economic countries (then known as the G-5, now known as the G-8) signed the Plaza Accord in New York City in 1985 to raise the value of the yen against the US dollar and other major currencies. The result: The United States dollar lost value that slowly but surely made us, as a country, a competitively priced exporter. But something has gone wrong. As the numbers below show, even with USA and other government assistance, the German and Japanese exporting communities are significantly more focused and efficient in exporting their countries finished products.
(COMPARATIVE GRAPH (in billions of US dollars from United Nations Statistics) OF PHYSICAL GOODS EXPORTED, PER CAPITA, IN 1998 BY GERMANY, JAPAN AND THE USA. (Services were not factored in).
Copyright 1999 © Jeff Henderson All rights reserved.
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